Chinese stock markets suspended as shares tumble

Beijing, Jan 4 (IANS) Trading on China’s stock markets were suspended on Monday after shares tumbled seven percent, triggering the new “circuit breaker” mechanism on the first trading day of 2016.

The early end to trading on Shanghai and Shenzhen bourses, the first in the history of China’s stock markets, coincided with the launch of the automatic circuit breaker, designed to contain wild swings in the markets, Xinhua news agency reported.

The mechanism follows the Hushen 300 Index, which reflects the performance of both Shanghai and Shenzhen traded stocks.

When the Hushen 300 rises or falls by 5 percent, the circuit breaker imposes a 15-minute suspension of trading. If fluctuations hit the 7-percent mark, trading is terminated for the day.

At 1.12 p.m., trading was suspended for 15 minutes and, immediately after reopening at 1.33 p.m., the index fell a further two percent where upon trading ceased.

When trading closed, the Shanghai Composite Index was down 6.85 percent, the smaller Shenzhen index down 8.16 percent, and the ChiNext Index, China’s NASDAQ-style board of growth enterprises, down 8.21 percent. The sub-index for financial heavyweights, which tracks 51 banks and insurers, dropped 8.3 percent, with 16 financial firms falling by the daily limit of 10 percent.